Divestiture Decision
Response to the following problem:
Ethridge Co. of Atlanta, Georgia, has a subsidiary in India that produces products and sells them throughout Asia. In response to the September 11, 2001, terrorist attack on the United States, Ethridge Co. decided to conduct a capital budgeting analysis to determine whether it should divest the subsidiary.
Why might this decision be different after the attack as opposed to before the attack?
Describe the general method for determining whether the divestiture is financially feasible.